#1194129 - 06/02/09 02:26 AM
Reg B, requiring signers, co-signers, joint intent
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Anonymous
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In a recent loan compliance audit I have come across a lender who loves to add signers (parents for unqualified adult children or nonappicant spouses) not bother with joint intent, and also prefers to order the signing order on a loan. Obviously this is all going into an audit report. In addition to the Reg B issues and Fair Lending issues, there are other compliance issues as well. However, I think my real challenge will be to convince senior management that their new star senior lender is creating quite a compliance mess for the bank. So, I'm looking for ammunition for my arsenal. Comments please? A very typical scenario is a young adult requesting credit, debt consolidation is typical, has a poor credit score, so the lender has a parent added as a co-borrower (not co-signer) added on the loan. I asked if he first denied the orginal request. reply- "NO". I asked if the bank counteroffered with a co-signer. reply- "NO - that is against bank policy". So, his "workaround" is to originate a joint loan, parent and adult child but requires the parent to be the primary borrower.
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#1194266 - 06/02/09 02:29 PM
Re: Reg B, requiring signers, co-signers, joint intent
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Anonymous
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Quote: "How do you have a "primary" borrower on "joint" credit??"
I have that same question. The response is that the lender would not lend to the first applicant (son). Seems to me that is what the loan policy is stating, if the applicant doesn't qualify, don't do the loan, even with a co-signer to "shore up the credit". The lender solution is to have the mom (or strong borrwer) apply for the loan and then it doesn't matter what she does with the proceeds. The addition of the son as a co-borrower is to help improve credit score.
Quote: "If you have any non-applicant spouses involved without proper documentation, you going to be in world of hurt if an examiner figures it out."
Again, I completely agree. I don't think it is that hard to figure out, so I'm certain any examiner would easily find this. With the number of similar loans I found in a short period of time, I believe it to be a pattern and practice.
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